Time to raise the minimum wage

Wednesday

Jul 31, 2013 at 6:00 AMJul 31, 2013 at 10:11 AM

By Marc R. Pacheco

Recently, community advocates, low-wage workers, and business leaders around the commonwealth and across the country recognized the "National Day of Action to Raise Up America" to observe that four years have gone by since the federal minimum wage has gone up.

Here in Massachusetts, the situation is even worse: This past January marked five years since we last gave minimum-wage workers a raise in our state.

Our minimum wage of $8 an hour has languished since 2008. Meanwhile, the salaries of employees at the top of the pay scale continue to soar, designating Massachusetts one of the highest wage states in the nation.

What is worse is minimum wage workers have seen the purchasing power of their earnings decline since 1968, when the minimum wage hit its peak. At that time, in 2013-inflation adjusted dollars, minimum wage workers made roughly $10.72 an hour, according to the Massachusetts Budget and Policy Center.

If we were to raise the minimum wage to $11 an hour, the Massachusetts Budget and Policy Center says more than 809,000 workers would be impacted directly and indirectly.

The Legislature's Joint Committee on Labor and Workforce Development is reviewing the bill to do so, to strengthen the minimum wage incrementally by 2015, and then index it to inflation to prevent further declines in value.

Now, there are plenty of those who disagree with that proposal; those same critics cried out the last time we voted to increase the minimum wage to its current level, in 2006.

It is not "wishful thinking" to look at data that has proven time and time again that raising the minimum wage does not hurt the economy.

The Massachusetts Budget and Policy Center looked at it; they weighed the six times our minimum wage has increased since 1995, and found that when the minimum wage goes up, job growth in low-wage industry sectors did better than job growth in high-wage sectors.

In New England from 2007 to 2009, they looked at the five states that increased their minimum wage in the midst of the Great Recession.

The states with the larger minimum wage increases had less job loss. Rhode Island, the only state that did not strengthen its minimum wage during that time period, saw the largest job decline in the region.

John Schmitt, a senior economist with the Center for Economic and Policy Research in Washington, D.C., published a paper just this year, titled, "Why Does the Minimum Wage Have No Discernible Effect on Employment?"

Acknowledging that "the employment effect of the minimum wage is one of the most studied topics in all of economics," Schmitt points to the adjustments that businesses make in order to prevent cutting employees when the minimum wage increases, including a reorganization of operations, the savings that businesses gain as turnover diminishes when low-wage workers get a raise, and an increase in productivity from those workers as a result.

Schmitt concludes that "the cost shock of the minimum wage is small relative to most firms' overall costs and only modest relative to the wages paid to low-wage workers."

Increases to the minimum wage, ultimately, cannot be blamed for increases in the unemployment rate.

The teenager unemployment rate, for example, which spiked to record levels in recent years, did not come from minimum wage increases, according to a report by the National Employment Law Project.

Rather, the Great Recession and a jobs crisis nationwide were to blame. Economists at both the University of California and the University of Massachusetts broke down minimum wage increases at the state and federal level over the last 20 years and determined that they did drive the teen employment rate down.

Still, some make the case that earned income tax credits are the only way to go for low-wage workers.

The University of Massachusetts Amherst's Political Economy Research Institute, however, argues that a strong minimum wage and the earned income tax credit must work hand in hand in order to best support our lowest paid employees and their families.

Don't take it from me. Take it from the economists, researchers, and employment analysts who prove that strengthening the minimum wage does not crush job opportunities for low-wage workers, despite the number of times the opposition will make that claim.

To repeat that same fear-mongering narrative over and over does not make it true. In fact, it is disproved each and every time our most disadvantaged workers finally receive the pay raise they need and deserve.